20-1209-bk

In re: Clinton Nurseries

In the

United States Court of Appeals

for the Second Circuit

August Term, 2020

No. 20-1209-bk

IN RE: CLINTON NURSERIES, INC.; CLINTON

NURSERIES OF MARYLAND, INC.; CLINTON

NURSERIES OF FLORIDA, INC.; TRIEM LLC,

Debtors.

CLINTON NURSERIES, INC.; CLINTON NURSERIES OF MARYLAND, INC.;

CLINTON NURSERIES OF FLORIDA, INC.,

Debtors-Appellants,

TRIEM LLC,

Debtor,

v.

WILLIAM K. HARRINGTON, UNITED STATES TRUSTEE, REGION 2,

Trustee-Appellee.

Appeal from the United States Bankruptcy Court

for the District of Connecticut.

No. 17-31897— James J. Tancredi, Judge.
2

ARGUED: OCTOBER 23, 2020

DECIDED: MAY 24, 2021

Before: RAGGI, SULLIVAN, and NARDINI, Circuit Judges.

Debtors-Appellants Clinton Nurseries, Inc., Clinton Nurseries of Maryland, 

Inc., and Clinton Nurseries of Florida, Inc. appeal from an order of the Bankruptcy 

Court (James J. Tancredi, J.) entered on August 29, 2018, rejecting their 

constitutional challenge to quarterly fees imposed during the pendency of their 

bankruptcy proceeding. In 2017, Congress passed an amendment (the “2017 

Amendment”) to the statute setting forth quarterly fees in bankruptcy cases, 28 

U.S.C. § 1930. The 2017 Amendment increased quarterly fees in judicial districts 

in which the United States Trustee Program oversees bankruptcy administration 

(“UST Districts”). Judicial districts in which judicially appointed bankruptcy 

administrators perform the same function (“BA Districts”) did not immediately 

adopt an equivalent fee increase. Congress later passed the Bankruptcy 

Administration Improvement Act of 2020, Pub. L. No. 116-325 (the “2020 Act”), 

which requires that UST Districts and BA Districts charge equal fees. Appellants 

are debtors who filed for bankruptcy in a UST District and were charged the 2017 

Amendment’s fee increase during a period in which BA Districts were charging 

lower fees. The Bankruptcy Court rejected Appellants’ argument that the 2017 

Amendment violated the uniformity requirement of the Bankruptcy Clause of the 

United States Constitution. We hold that the 2017 Amendment is a bankruptcy 

law subject to the uniformity requirement of the Bankruptcy Clause. We also hold 

that, under the version of § 1930 in effect prior to the 2020 Act, the 2017 

Amendment violated the uniformity requirement. We therefore REVERSE the 

decision of the Bankruptcy Court. 
3

ERIC A. HENZY (Christopher H. Blau, on the brief),

Zeisler & Zeisler, P.C., Bridgeport, Connecticut, for 

Debtors-Appellants.

JEFFREY B. CLARK (Ethan P. Davis, Mark B. Stern, 

Jeffrey E. Sandberg, Ramona D. Elliott, P. Matthew 

Sutko, and Beth A. Levene, on the brief), U.S. Department 

of Justice, Washington, D.C., for Trustee-Appellee.

WILLIAM J. NARDINI, Circuit Judge:

Judicial districts in the United States fall into two categories: those in which 

the United States Trustee Program oversees bankruptcy administration (“UST 

Districts”) and those in which judicially appointed bankruptcy administrators 

perform the same function (“BA Districts”). See Matter of Buffets, L.L.C., 979 F.3d 

366, 370 (5th Cir. 2020). In 2017, Congress passed an amendment (the “2017 

Amendment”) to 28 U.S.C. § 1930, the statute setting forth quarterly fees in 

bankruptcy cases. Id. at 371. The 2017 Amendment increased quarterly fees in 

UST Districts, but the Judicial Conference of the United States (“Judicial 

Conference”) did not immediately impose a parallel increase in the BA Districts.

Id. at 372. Congress later passed the Bankruptcy Administration Improvement Act 
4

of 2020, Pub. L. No. 116-325 (the “2020 Act”), which modified § 1930 to clearly 

mandate that UST Districts and BA Districts charge equal fees. 

Debtors-Appellants Clinton Nurseries, Inc., Clinton Nurseries of Maryland, 

Inc., and Clinton Nurseries of Florida, Inc. (collectively, “Clinton”) filed for 

bankruptcy in December 2017 in the District of Connecticut, which is a UST 

District. Clinton incurred fees in accordance with the increase set forth in the 2017 

Amendment during the period after the 2017 Amendment but before the effective 

date of the 2020 Act, i.e., while the BA Districts were charging lower fees. 

Clinton now appeals from an order of the Bankruptcy Court (James J. 

Tancredi, J.) entered on August 29, 2018, rejecting Clinton’s constitutional 

challenge to the 2017 Amendment. Specifically, the Bankruptcy Court rejected 

Clinton’s argument that, under the version of § 1930 in effect prior to the 2020 Act, 

the 2017 Amendment violated the Bankruptcy Clause of the United States 

Constitution, which empowers Congress to enact “uniform Laws on the subject of 

Bankruptcies throughout the United States.” U.S. Const. art. I, § 8, cl. 4 (emphasis 

added).
5

We hold that the 2017 Amendment is a “Law[] on the subject of 

Bankruptcies,” id., implicating the uniformity requirement of the Bankruptcy 

Clause. We also hold that, under the version of § 1930 in effect prior to the 2020 

Act, the 2017 Amendment violated the uniformity requirement. We therefore 

REVERSE the decision of the Bankruptcy Court.

I. Background

A. Quarterly fees in UST and BA Districts prior to the 2017 

Amendment

The U.S. Trustee Program, which is part of the U.S. Department of Justice, 

oversees bankruptcy administration in 88 of the 94 federal districts. See 28 U.S.C. 

§ 581(a); Buffets, 979 F.3d at 370. Judicially appointed bankruptcy administrators, 

with the oversight of the Judicial Conference, perform the same role in the 

remaining six districts, which are located in North Carolina and Alabama. See 

Federal Courts Improvements Act of 2000, Pub. L. No. 106-518 § 501, 114 Stat. 2410, 

2421 (2000); Buffets, 979 F.3d at 370; USA Sales, Inc. v. Off. of the United States Tr.,

No. 5:19-cv-02133, 2021 WL 1226369, at *3 (C.D. Cal. Apr. 1, 2021).
6

Congress funds the U.S. Trustee Program through annual appropriations, 

offset by money in an account known as the United States Trustee System Fund. 

See 28 U.S.C. § 589a; In re Prines, 867 F.2d 478, 480 (8th Cir. 1989). Most of the 

money in the United States Trustee System Fund comes from quarterly fees paid 

by debtors in UST Districts pursuant to 28 U.S.C. § 1930(a)(6). Section 

1930(a)(6)(A) provides in relevant part:

[A] quarterly fee shall be paid to the United States trustee . . . in each 

case under chapter 11 of title 11 . . . for each quarter (including any 

fraction thereof) until the case is converted or dismissed, whichever 

occurs first.

In creating the United States Trustee System Fund and mandating quarterly fees, 

Congress sought to ensure the trustee program would be paid for “by the users of 

the bankruptcy system—not by the taxpayer.” H.R. Rep. No. 99-764 at 22.

Initially, only debtors in UST Districts paid quarterly fees. See Buffets, 979 

F.3d at 371. In 1994, however, the Ninth Circuit held that the absence of quarterly 

fees in BA Districts was unconstitutionally non-uniform. See St. Angelo v. Victoria 

Farms, Inc., 38 F.3d 1525, 1535 (9th Cir. 1994). Congress thereafter enacted 
7

§ 1930(a)(7) to provide for corresponding quarterly fees in BA Districts, stating in

relevant part:

In districts that are not part of a United States trustee region [i.e. BA 

Districts]. . . , the Judicial Conference of the United States may require 

the debtor in a case under chapter 11 of title 11 to pay fees equal to 

those imposed by paragraph (6) of this subsection.

28 U.S.C. § 1930(a)(7) (2000). BA Districts deposit these quarterly fees into a fund 

that offsets judicial branch appropriations. See id.

Following the passage of § 1930(a)(7), the Judicial Conference harmonized 

fees in UST and BA Districts by directing that quarterly fees be imposed in BA 

Districts “in the amounts specified in 28 U.S.C. § 1930.” Report of the Proceedings of 

the Judicial Conference of the United States 45–46 (Sept./Oct. 2001), 

https://go.usa.gov/xf2vr. This parity remained in place until the first quarter of 

2018, when the 2017 Amendment took effect in the UST Districts.

B. The 2017 Amendment

Section 1930(a)(6) ties the amount of a debtor’s fee in a UST District to the 

size of “disbursements”—i.e., the debtor’s payments to third parties. 28 U.S.C. 
8

§ 1930(a)(6)(A). The larger the disbursements, the larger the quarterly fee.1 Prior 

to the 2018 effective date of the 2017 Amendment, the maximum fee under 

§ 1930(a)(6) was “$30,000 for each quarter in which disbursements total more than 

$30,000,000.” 28 U.S.C. § 1930(a)(6) (2008).

In 2017, Congress amended § 1930(a)(6) to temporarily add to the existing 

fee schedule an even higher fee where disbursements equaled or exceeded $ 1 

million. The 2017 Amendment states as follows:

1 Specifically, the statute, both before and after the 2017 amendment, provides in relevant part:

The fee shall be $325 for each quarter in which disbursements total less than 

$15,000; $650 for each quarter in which disbursements total $15,000 or more but 

less than $75,000; $975 for each quarter in which disbursements total $75,000 or 

more but less than $150,000; $1,625 for each quarter in which disbursements total 

$150,000 or more but less than $225,000; $1,950 for each quarter in which 

disbursements total $225,000 or more but less than $300,000; $4,875 for each 

quarter in which disbursements total $300,000 or more but less than $1,000,000; 

$6,500 for each quarter in which disbursements total $1,000,000 or more but less 

than $2,000,000; $9,750 for each quarter in which disbursements total $2,000,000 or 

more but less than $3,000,000; $10,400 for each quarter in which disbursements 

total $3,000,000 or more but less than $5,000,000; $13,000 for each quarter in which 

disbursements total $5,000,000 or more but less than $15,000,000; $20,000 for each 

quarter in which disbursements total $15,000,000 or more but less than $30,000,000; 

$30,000 for each quarter in which disbursements total more than $30,000,000. 

28 U.S.C. § 1930(a)(6)(A) (2017); 28 U.S.C. § 1930(a)(6) (2008). 
9

During each of fiscal years 2018 through 2022, if the balance in the 

United States Trustee System Fund as of September 30 of the most 

recent full fiscal year is less than $200,000,000, the quarterly fee 

payable for a quarter in which disbursements equal or exceed 

$1,000,000 shall be the lesser of 1 percent of such disbursements or 

$250,000.

Id. § 1930(a)(6)(B) (2017). Congress enacted the 2017 Amendment after observing

a decreasing balance in the United States Trustee System Fund, due to a 

nationwide decline in bankruptcy filings. See Buffets, 979 F.3d at 371; USA Sales, 

Inc., 2021 WL 1226369, at *4.

As a result of the enactment of the 2017 Amendment, the parity of fees 

between UST Districts and BA Districts came to an end at the start of 2018. While 

UST Districts began implementing the fee increase in the first quarter of 2018, the 

BA Districts did not do so immediately. See Buffets, 979 F.3d at 372. Rather, it was 

not until September 2018 that the Judicial Conference adopted an equivalent fee

increase in BA Districts. See Report of the Proceedings of the Judicial Conference of the 

United States 11–12 (Sept. 13, 2018), 

https://www.uscourts.gov/sites/default/files/2018-09_proceedings.pdf. Even 

then, the Judicial Conference instructed that the fee increase would not take effect 
10

until October 1, 2018, and would apply only to cases filed after that date. Id. Thus, 

a debtor in a BA District who filed for bankruptcy prior to October 1, 2018, would 

never be charged the fee increase “no matter how long the case remain[ed]

pending.” Buffets, 979 F.3d at 372. By contrast, “all qualifying Chapter 11 debtors 

in UST Districts were assessed the increased fees—even debtors in cases 

commenced before the 2017 Amendment was enacted.” USA Sales, Inc., 2021 WL 

1226369, at *4.

C. Clinton’s quarterly fee challenge

Clinton operates plant nurseries—growing trees, shrubs, flowers, and 

ornamental grasses—in Connecticut, Florida, and Maryland. On December 18, 

2017, Clinton filed for Chapter 11 bankruptcy protection in the District of 

Connecticut, which is a UST District. 

In the first quarter of 2018, Clinton made disbursements of approximately 

$ 3.2 million—well over the $ 1 million threshold of the 2017 Amendment. Since 

then, Clinton’s disbursements have consistently exceeded the threshold. 
11

Accordingly, Clinton has been charged—and has paid—the increased quarterly 

fees as set forth in the 2017 Amendment. 

On April 17, 2019, Clinton filed a motion with the Bankruptcy Court, 

seeking relief from the increased quarterly fees. Clinton argued that the 2017 

Amendment violated the Bankruptcy Clause of the U.S. Constitution, which 

authorizes Congress to “[t]o establish . . . uniform Laws on the subject of 

Bankruptcies throughout the United States.” U.S. Const. art. I, § 8, cl. 4 (emphasis 

added). Trustee-Appellee William K. Harrington, United States Trustee, Region 2 

(the “Trustee”) filed an objection to the motion. 

On August 28, 2019, the Bankruptcy Court issued an order sua sponte 

converting the contested motion to an adversary proceeding, determining to treat 

the objection as a motion to dismiss, and dismissing the adversary proceeding for 

failure to state claims upon which relief could be granted. The Bankruptcy Court 

agreed with Clinton that the 2017 Amendment was a bankruptcy law subject to 

the uniformity requirement of the Bankruptcy Clause. But the Bankruptcy Court 
12

also agreed with the Trustee that the 2017 Amendment was uniform on its face. 2 

This direct appeal followed.3

D. The 2020 Act

Shortly after the parties fully briefed and argued this appeal, Congress 

amended 28 U.S.C. § 1930 through the 2020 Act. The 2020 Act changed the word 

“may” in § 1930(a)(7) to “shall,” with the provision now stating in relevant part:

In districts that are not part of a United States trustee region [i.e. BA 

Districts]. . . , the Judicial Conference of the United States shall require 

the debtor in a case under chapter 11 of title 11 to pay fees equal to 

those imposed by paragraph (6) of this subsection.

28 U.S.C. § 1930(a)(7) (emphasis added).

2 By the same order, the Bankruptcy Court determined that another debtor, Triem, LC (“Triem”), 

did not have standing to challenge the 2017 Amendment because Triem’s fees under the 2017 

Amendment were identical to the fees Triem would have paid absent the amendment. Triem has 

not appealed, and Clinton expressly declines to challenge the standing determination. 

3 On November 8, 2019, a district court in the District of Connecticut certified this matter for direct 

appeal pursuant to 28 U.S.C. § 158(d)(2)(A). On April 14, 2020, this Court granted Clinton’s 

petition for permission to appeal in this Court. 
13

II. Discussion

This Court reviews a bankruptcy court’s legal conclusions de novo and 

accepts a bankruptcy court’s factual findings unless such findings are clearly 

erroneous. In re Barnet, 737 F.3d 238, 246 (2d Cir. 2013). 

On appeal, Clinton argues that the Bankruptcy Court erred in rejecting its

argument that the 2017 Amendment was unconstitutionally non-uniform on its 

face. 4 Clinton explains that, at the time it incurred the disputed quarterly fee 

charges in this case, § 1930(a)(6) provided that UST Districts “shall” charge the fee 

increase, while § 1930(a)(7) provided that BA Districts “may” charge the fee 

increase. This distinction, according to Clinton, permitted the delayed and then 

incomplete implementation of the 2017 Amendment’s fee increase in the BA 

Districts, which resulted in a fee discrepancy between the UST and BA Districts

and, thus, a lack of constitutionally mandated uniformity.

4 Clinton expressly disclaims any as-applied challenge. See Appellants’ Br. at 22 n.7 (“To be clear, 

the Appellants did not and do not make an as-applied challenge to the 2017 Amendment. . . . 

[T]he Appellants claim that the 2017 Amendment is facially unconstitutional . . . .”).
14

The 2020 Act, as explained above, has recently replaced the word “may” 

with “shall” in § 1930(a)(7). As amended, the fee schedule set forth in § 1930(a)(6), 

including the 2017 Amendment, should—at least going forward—apply

uniformly in UST Districts and BA Districts. Nonetheless, we are still left with the 

question of whether Clinton was charged unconstitutional fees under the prior 

version of the statute, when the word “may” remained in place and the BA 

Districts had yet to fully implement the 2017 Amendment’s fee increase. 5

The Trustee raises two arguments in response. First, the Trustee argues that 

the Bankruptcy Court erred in holding that the 2017 Amendment is even subject 

to the Bankruptcy Clause. Second, assuming the Bankruptcy Clause does govern 

the analysis, the Trustee defends the Bankruptcy Court’s conclusion that the 2017 

Amendment does not violate the Bankruptcy Clause. 

5 It is by no means obvious that the 2020 Act will entirely eliminate the geographic discrepancy 

that Clinton argues constitutes unconstitutional non-uniformity. See USA Sales, Inc., 2021 WL 

1226369, at *17 n.46 (“[I]t remains unclear to which cases the Judicial Council will apply the 2020 

Act. . . . [I]f the Judicial Council applies the new fees only to cases filed on or after the effective 

date of the 2020 Act (as the Judicial Council did with the 2017 Amendment), then the 

constitutional non-uniformity problem will persist.”). We need not, and do not, decide this issue 

because before us is only the constitutionality of the 2017 Amendment prior to the 2020 Act.
15

We first consider our subject matter jurisdiction and then address each of 

the Trustee’s arguments in turn.

A. This Court has subject matter jurisdiction to consider Clinton’s

challenge.

At the outset, we must consider whether this Court has subject matter 

jurisdiction over Clinton’s challenge to the constitutionality of the 2017 

Amendment. 

“Article III, Section 2 of the Constitution limits the subject-matter 

jurisdiction of the federal courts to ‘Cases’ and ‘Controversies.’” SM Kids, LLC v. 

Google LLC, 963 F.3d 206, 211 (2d Cir. 2020). “Standing ‘is an essential and 

unchanging part of the case-or-controversy requirement of Article III.’” Cent. 

States Se. & Sw. Areas Health & Welfare Fund v. Merck-Medco Managed Care, L.L.C. 

(“Cent. States”), 433 F.3d 181, 198 (2d Cir. 2005) (quoting Lujan v. Defs. of Wildlife, 

504 U.S. 555, 560 (1992)); see Warth v. Seldin, 422 U.S. 490, 498 (1975) (“In its 

constitutional dimension, standing imports justiciability: whether the plaintiff has 

made out a ‘case or controversy’ between himself and the defendant within the 

meaning of Art. III. This is the threshold question in every federal case, 
16

determining the power of the court to entertain the suit.”). Because constitutional

standing implicates the subject matter jurisdiction of the Court, we may raise the 

issue nostra sponte. Cent. States, 433 F.3d at 198.

“To establish Article III standing, a plaintiff must . . . allege, and ultimately 

prove, that [the plaintiff] has suffered an injury-in-fact that is fairly traceable to the 

challenged action of the defendant, and which is likely to be redressed by the 

requested relief.” Baur v. Veneman, 352 F.3d 625, 632 (2d Cir. 2003). Here, Clinton

filed for bankruptcy prior to October 1, 2018; was subject to a fee increase pursuant 

to the 2017 Amendment due to the size of its disbursements; and paid more than 

a similarly situated debtor (i.e., one with the same filing date and disbursement 

size) would owe in a BA District, where the increased fee schedule had not yet 

been implemented by the Judicial Conference. Thus, Clinton has sustained a 

concrete injury-in-fact that is traceable to the geographically discrepant fee 

increase and that is capable of redress through a partial refund (reducing Clinton’s

quarterly fees to the level it would have paid had it filed for bankruptcy at the 

same time in a BA District rather than a UST District). We conclude, therefore, 
17

that Clinton has standing to raise this constitutional challenge and to seek 

reimbursement.

B. The 2017 Amendment is subject to the uniformity requirement of 

the Bankruptcy Clause.

Turning to the merits of the constitutional challenge, we must first consider 

whether the 2017 Amendment is a “Law[] on the subject of Bankruptcies” 

implicating the uniformity requirement of the Bankruptcy Clause. U.S. Const. art. 

1, § 8, cl. 4. The Trustee argues that the Bankruptcy Clause does not apply to the 

2017 Amendment “because it is an administrative funding measure, not a 

substantive bankruptcy law.” Appellee’s Br. at 13.

The Trustee’s argument has been repeatedly rejected by other courts. See In 

re MF Glob. Holdings Ltd., 615 B.R. 415, 446 (Bankr. S.D.N.Y. 2020) (collecting cases

and observing that “every bankruptcy court that has addressed the 

constitutionality of the 2017 Amendment under the Bankruptcy Clause” has 
18

“concluded that the 2017 Amendment is ‘on the subject of Bankruptcies’”).6 And

for good reason: The subject of the 2017 Amendment plainly fits within the 

Supreme Court’s broad definition of “bankruptcy” as “the subject of the relations 

between an insolvent or nonpaying or fraudulent debtor and his creditors, 

extending to his and their relief.” Ry. Labor Execs.' Ass’n v. Gibbons, 455 U.S. 457, 

466 (1982) (internal quotation marks omitted)). The 2017 Amendment amends a 

statute, § 1930, that is literally entitled: “Bankruptcy fees.” See SCI Direct, 2020 WL 

5929612, at *9.7 Under § 1930(a)(6), a debtor must “pay pre-confirmation UST fees 

as an administrative priority expense before it pays its commercial creditors, 

6 See also In re SCI Direct, LLC, 2020 WL 5929612, at *9 (Bankr. N.D. Ohio Sept. 22, 2020) (“[T]he 

2017 amendment is clearly a law on the subject of bankruptcies. It appears that every court to 

address the constitutionality of the 2017 amendment under the Bankruptcy Clause has reached 

the same conclusion.”); cf. Buffets, 979 F.3d at 377 (“The consensus view of bankruptcy courts that 

Chapter 11 fees are Bankruptcy Clause legislation is likely correct. But we need not decide the 

question because, even assuming it is, we find no uniformity problem.”).

7 Congress created § 1930 as part of a 1978 law entitled “An act to establish a uniform Law on the 

Subject of Bankruptcies.” In re MF Glob. Holdings Ltd., 615 B.R. at 446 (emphasis added) (internal 

quotation marks omitted). Decades later, “Congress stated that it was enacting the 2017 

Amendment under the Bankruptcy Clause,” with “the sponsor of the bill containing the 2017 

Amendment . . . inform[ing] Congress that it had the power to enact the 2017 Amendment 

pursuant to Article 1, Section 8, Clause 4 of the Constitution . . . .” Id.
19

bondholders, and shareholders.” In re MF Glob. Holdings Ltd., 615 B.R. at 445 

(internal quotation marks omitted). Accordingly, any change in fees imposed 

pursuant to § 1930 “affects the amount of funds available for distribution to lowerpriority creditors.” SCI Direct, 2020 WL 5929612, at *9 (internal quotation marks 

omitted).8

As the Ninth Circuit reasoned in addressing § 1930 before the 2017 

Amendment, the quarterly fee statute “clearly governs the relationship between 

creditor and debtor and, accordingly, falls within the scope of” the uniformity 

requirement set forth in the Bankruptcy Clause. St. Angelo, 38 F.3d at 1530. We 

reach the same conclusion here. We hold that, because the 2017 Amendment 

similarly governs debtor-creditor relations and impacts the relief available, it is a 

8 Accord In re Life Partners Holdings, Inc., 606 B.R. 277, 287–88 (Bankr. N.D. Tex. 2019) (because 

“[t]he fees required by § 1930 are granted administrative claim status in bankruptcies, . . . any 

increase or decrease in fees payable to the U.S. Trustee affects the amount of funds available for 

distribution to lower-priority creditors and the debtor”), abrogated on other grounds by Matter of 

Buffets, L.L.C., 979 F.3d 366 (5th Cir. 2020); see also In re Mosaic Mgmt. Grp., Inc., 614 B.R. 615, 623 

(Bankr. S.D. Fla. 2020) (because “[t]he amount of the fee due to the UST directly impacts 

distributions to other creditors[,] . . . § 1930(a)(6), both before and after enactment of the [2017] 

Amendment, is a law on the subject of bankruptcies that implicates the related uniformity 

requirement under the Constitution”). 
20

bankruptcy law subject to the Bankruptcy Clause and is constitutional only if 

“uniform.” U.S. Const. art. I, § 8, cl. 4.

C. Prior to the 2020 Act, the 2017 Amendment was unconstitutionally

non-uniform on its face.

We turn next to the question of whether, under the version of § 1930 in effect 

prior to the 2020 Act, the 2017 Amendment violated the uniformity requirement 

of the Bankruptcy Clause. 

The parties do not dispute that, during the period in which Clinton paid the 

quarterly fees at issue in this case, there was a clear geographic discrepancy in 

application of the 2017 Amendment’s fee increase: debtors like Clinton who filed 

for bankruptcy in UST Districts were charged the increase beginning January 1, 

2018; debtors who filed for bankruptcy in BA Districts before October 1, 2018, were 

never charged the increase.

The Trustee makes two arguments as to why, notwithstanding the 

geographic discrepancy, the 2017 Amendment was uniform on its face. First, the 

Trustee contends that, under the text of § 1930 prior to the 2020 Act, Congress 

mandated equal implementation of the 2017 Amendment’s fee increase in UST and 
21

BA Districts, and the delayed and inconsistent implementation of the fee increase 

in the BA Districts actually contravened statutory language that was facially 

uniform. Second, the Trustee suggests that a narrowly defined exception to the 

uniformity requirement—the “geographically isolated problem” exception—

justified the fee discrepancy. We find neither argument persuasive.

1. The Trustee’s proposed textual interpretation is not 

persuasive.

Clinton, in arguing that the pre-2020 Act version of the 2017 Amendment

was non-uniform on its face, traces the fee discrepancy to a lexical distinction 

between § 1930(a)(6) and § 1930(a)(7). Specifically, § 1930(a)(6) stated that 

designated fees—before and after the 2017 Amendment’s fee increase—“shall” be 

imposed on debtors in UST Districts. By contrast, before the 2020 Act, § 1930(a)(7) 

stated that the Judicial Conference “may” impose the same fees from § 1930(a)(6) 

in BA Districts. See 28 U.S.C. § 1930(a)(6)-(7). Thus, by the plain terms of the 

statute, while § 1930(a)(6) required application of the increase in UST Districts, 

§ 1930(a)(7) permitted application of the increase in BA Districts. And it is this 

distinction, Clinton explains, that yielded the dissimilar application: In accordance 
22

with the discretion afforded by the permissive language of § 1930(a)(7), the 

Judicial Conference delayed the implementation of the fee increase in the BA 

Districts for nine months and, even after implementation, did not apply the 

increase on a going-forward basis to debtors who filed for bankruptcy prior to the 

implementation date. 

The Trustee asks us to ignore the distinction between the “shall” used in 

§ 1930(a)(6) and the “may” used in § 1930(a)(7), urging us to view both provisions 

as imposing, uniformly, a mandatory obligation. He emphasizes that § 1930(a)(7) 

was enacted to eliminate the uniformity problem identified by the Ninth Circuit 

in St. Angelo, supporting Congress’s intent to harmonize fees. Through this lens, 

the Trustee reasons, the Judicial Conference’s delayed implementation in the BA 

Districts would appear an unauthorized act which would not render the statute 

itself non-uniform. See Appellee’s Br. at 28–29 (“Nothing in Congress’s 2017 

amendment authorized, much less directed, the Judicial Conference to implement 

the amendment on a different effective date. . . . The failure to implement a fee 
23

statute consistently across all judicial districts does not render the statute itself 

unconstitutional . . . .”). 

We cannot, however, simply overlook Congress’s decision to use the 

permissive term “may” in § 1930(a)(7). To be sure, the Supreme Court has 

acknowledged that, in some limited scenarios, the word “may” can impose a 

mandatory directive: Although “[t]he word ‘may,’ when used in a statute, usually 

implies some degree of discretion[,] . . . [t]his common-sense principle of statutory 

construction is by no means invariable . . . and can be defeated by indications of 

legislative intent to the contrary or by obvious inferences from the structure and 

purpose of the statute.” United States v. Rodgers, 461 U.S. 677, 706 (1983) (footnote 

and citations omitted). Here, however, the choice of the permissive term appears 

particularly intentional given that Congress used “shall” in numerous other places 

in § 1930—and even in § 1930(a)(7) itself, which, in its pre-2020 Act form, read in 

full:

In districts that are not part of a United States trustee region as 

defined in section 581 of this title, the Judicial Conference of the 

United States may require the debtor in a case under chapter 11 of title 

11 to pay fees equal to those imposed by paragraph (6) of this 
24

subsection. Such fees shall be deposited as offsetting receipts to the 

fund established under section 1931 of this title and shall remain 

available until expended.

28 U.S.C. § 1930(a)(7) (emphasis added). The Supreme Court cautions against 

ignoring contexts in which “Congress’ use of the permissive ‘may’ . . . contrasts 

with the legislators’ use of a mandatory ‘shall’ in the very same section,” and 

where “[e]lsewhere in [the same statute], Congress used ‘shall’ to impose 

discretionless obligations.” Lopez v. Davis, 531 U.S. 230, 241 (2001).9

9 We note that, in amending § 1930(a)(7) to replace “may” with “shall,” the 2020 Act purports to 

“confirm the longstanding intention of Congress that quarterly fee requirements remain consistent 

across all Federal judicial districts.” Pub. L. No. 116-325, § 2(a)(4)(B). While we certainly may 

consider a later Congress’s statements regarding the intention of the Congress that originally 

drafted § 1930(a)(7), we are not constrained to view such statements as dispositive. See Fed. Hous. 

Admin. v. Darlington, Inc., 358 U.S. 84, 90 (1958) (explaining that “[s]ubsequent legislation which 

declares the intent of an earlier law” is “entitled to weight” but is not “conclusive in determining 

what the previous Congress meant”); see also Haynes v. United States, 390 U.S. 85, 87 n.4 (1968) 

(“The view of a subsequent Congress of course provide no controlling basis from which to infer 

the purposes of an earlier Congress.” (emphasis added)); Smith v. Socialist People’s Libyan Arab 

Jamahiriya, 101 F.3d 239, 244 (2d Cir. 1996) (observing both that “subsequently enacted 

legislation might not be a reliable guide to the intent of a prior Congress” and also that “subsequent 

Congressional actions should not be rejected out of hand as a source that a court may consider in 

the search for legislative intent” (internal quotation marks omitted)). Ultimately, we cannot ignore 

the fact that, in analyzing the motivations behind the earlier Congress’s choice of the word “may,” 

the Congress that passed the 2020 Act inevitably looked through the lens of the constitutional 

quagmire that resulted. Cf. Consumer Prod. Safety Comm’n v. GTE Sylvania, Inc., 447 U.S. 102, 

117 (1980) (“[T]he views of a subsequent Congress form a hazardous basis for inferring the intent 

of an earlier one.”). We conclude that the ordinary meaning of “may” as permissive rather than 
25

Additionally, in recently rejecting the Trustee’s proposed textual 

interpretation, the Fifth Circuit explained that “[t]he Judicial Conference’s delayed 

implementation of the fee increase highlights the difference between ‘may’ and 

‘shall.’” Matter of Buffets, L.L.C., 979 F.3d at 378 n.10.10 It is, indeed, telling that the 

Judicial Conference itself apparently understood the 2017 Amendment as 

authorizing, but not requiring, it to impose a fee increase in BA Districts. Although

“courts should, if possible, interpret ambiguous statutes to avoid rendering them 

unconstitutional,” United States v. Davis, 139 S. Ct. 2319, 2332 n.6 (2019), for the 

mandatory (which, apparently, is how the Judicial Conference understood the word) outweighs 

Congress’s subsequent statement regarding its earlier meaning (which, we note, it oddly purported 

to confirm in a statute where it decided to amend that very language). 

10 See also In re Circuit City Stores, Inc., No. 19-2240, 2021 WL 1679568, at *12 (4th Cir. Apr. 29, 2021) 

(Quattlebaum, J. concurring in part and dissenting in part) (declining to read “may” in 28 U.S.C. 

§ 1930(a)(7) as imposing a mandatory obligation); USA Sales, Inc., 2021 WL 1226369, at *17 

(“[A]lthough the term ‘may’ is sometimes used (sloppily) to signify a mandatory obligation, 

Congress’ use of the term ‘shall’ in 28 U.S.C. § 1930(a)(6) is unambiguously mandatory, which 

indicates that term ‘may’ in the following paragraph, 28 U.S.C. § 1930(a)(7), is intended to be 

permissive. In other words, Congress required the new fees in the UST Districts but only allowed 

for their possibility in the BA Districts. The decision of the Judicial Conference to delay its 

adoption of the 2017 Amendment further underscores the difference between the terms ‘may’ 

and ‘shall.’” (internal quotation marks, alterations, and citations omitted)).
26

reasons we have already discussed, we find no ambiguity in the statute’s grant of 

permissive authority to the Judicial Conference to adjust fees and thus are obliged 

to identify unconstitutionality.

2. The “geographically isolated problem” exception does not 

apply.

The Trustee suggests that we can nonetheless salvage the constitutionality 

of the 2017 Amendment through application of the “geographically isolated 

problem” exception to the uniformity requirement—an exception recognized by 

the Supreme Court in Blanchette v. Connecticut General Insurance Corp., 419 U.S. 102 

(1974). In Blanchette, the Supreme Court addressed the constitutionality of the Rail 

Act, which set special laws for bankrupt railroads and expressly applied only to a 

particular geographic region. The Supreme Court concluded that the Rail Act did 

not contravene the Bankruptcy Clause’s uniformity requirement because all of the 

country’s bankrupt railroads at that time were located in the designated region 

and therefore, in targeting the national rail transportation crisis, the statute 

addressed a geographically isolated problem. Id. at 159–160. Blanchette explained, 

“The problem dealt with (under the Bankruptcy Clause) may present significant 
27

variations in different parts of the country. . . . [T]he uniformity clause was not 

intended to hobble Congress by forcing it into nationwide enactments to deal with 

conditions calling for remedy only in certain regions.” Id. at 159 (internal 

quotation marks, alterations, and citations omitted). 

Several bankruptcy courts across the country have applied the 

“geographically isolated problem” exception in upholding the constitutionality of 

the 2017 Amendment.11 The Fifth Circuit’s majority opinion in Buffets ultimately 

took the same approach, reasoning that the exception applied because the 2017 

Amendment aimed to ensure proper funding of the UST System—a system that 

exists only in an isolated geographic region. See Buffets, 979 F.3d at 378 (“Just as it 

did in addressing the failure of railroads in the industrial heartland, Congress 

11 See SCI Direct, 2020 WL 5929612, at *10 (“[T]he 2017 amendment . . . remedies a geographically 

isolated problem that is unique to UST Program Districts, i.e. the depletion of the UST System 

Fund.”); MF Glob. Holdings Ltd., 615 B.R. at 447 (“[T]he 2017 Amendment applies uniformly to 

debtors in UST Districts to solve the depleting funding unique to the UST Districts.”); Mosaic, 614 

B.R. at 624 (the 2017 Amendment is not unconstitutionally non-uniform on the whole because the 

“overarching purpose” of the 2017 Amendment is to “eliminat[e] a funding shortfall in the UST 

system and develop[] a reasonable reserve for the same,” and “the Amendment effected a fee 

increase only in districts where the UST is active”).
28

confronted the problem of an underfunded Trustee Program where it found it: in 

the Trustee districts.”). 12 The Fourth Circuit’s majority opinion in In re Circuit City 

Stores, Inc., agreed with the Fifth Circuit’s reasoning and similarly applied the

“geographically isolated problem” exception. See 2021 WL 1679568, at *6

(“Because only those debtors in Trustee districts use the U.S. Trustees, Congress 

reasonably solved the shortfall problem with fee increases in the underfunded 

districts.”).

We are concerned, however, that the bankruptcy courts and the Buffets and 

Circuit City opinions have overlooked a critical distinction. The Supreme Court 

did hold in Blanchette that Congress may “take into account differences that exist 

between different parts of the country, and . . . fashion legislation to resolve 

12 See also Buffets, 979 F.3d at 378 (“[Congress] drew a program-specific distinction that only 

indirectly has a geographic dimension. It does make it more expensive for a debtor in Texas than 

a debtor in North Carolina to go through bankruptcy, but that is not an arbitrary distinction based 

on the residence of the debtor or creditors; it is a product of the Texas debtor’s use of the Trustee. 

By increasing fees for large debtors in those districts, Congress sought to remedy a shortfall in 

the program’s funding. Only debtors in Trustee Districts use trustees, so Congress could solve 

the evil to be remedied with a fee increase in just the underfunded districts.” (internal quotation 

marks and citation omitted)).
29

geographically isolated problems.” 419 U.S. at 159. But the Supreme Court later 

clarified in Gibbons that, “[t]o survive scrutiny under the Bankruptcy Clause, a law 

must at least apply uniformly to a defined class of debtors.” Gibbons, 455 U.S. at 

473. In Blanchette, all members of the class of debtors impacted by the statute were 

confined to a sole geographic area: The statute applied only to bankrupt railroad 

companies, and there were no bankrupt railroad companies located outside the 

statutorily designated region. See Blanchette, 419 U.S. at 159–60. 13 Here, by

contrast, the 2017 Amendment’s fee increase applies to the class of debtors whose 

disbursements exceed $ 1 million, and there has been no suggestion that members 

of that broad class are absent in the BA Districts. This case therefore presents the 

exact problem avoided in Blanchette: Two debtors, identical in all respects save the 

13 See id. (“The national rail transportation crisis that produced the Rail Act centered in the 

problems of the rail carriers operating in the region defined by the Act, and these were the 

problems Congress addressed. No railroad reorganization proceeding, within the meaning of 

the Rail Act, was pending outside that defined region on the effective date of the Act or during 

the 180-day period following the statute’s effective date. Thus the Rail Act in fact operates 

uniformly upon all bankrupt railroads then operating in the United States and uniformly with 

respect to all creditors of each of these railroads.” (footnote omitted)). 
30

geographic locations in which they filed for bankruptcy, are charged dramatically 

different fees.14 

Nor is the funding shortfall plaguing the UST system caused by a 

“geographically isolated problem” that would place the entire class of affected 

debtors only in those districts. Rather, the distinction between UST Districts and 

BA Districts appears to exist only because Congress chose—for politically 

expedient reasons—to create a dual bankruptcy system. Matter of Buffets, L.L.C., 

979 F.3d at 383 (Clement, J., concurring in part and dissenting in part) (identifying 

distinction as an “arbitrary political relic”). Indeed, the UST program was 

intended to be a uniform, nationwide program, but lawmakers in Alabama and 

North Carolina resisted and, after receiving a number of extensions, ultimately 

were granted a permanent exemption from the UST program in an unrelated law. 

14 Cf. In re Circuit City Stores, Inc., 606 B.R. 260, 270 (Bankr. E.D. Va. 2019), aff’d in part, rev’d in part 

and remanded, No. 19-2240, 2021 WL 1679568 (4th Cir. Apr. 29, 2021) (“Had the Debtors filed their 

chapter 11 bankruptcy petitions a mere 140 miles south in Raleigh, North Carolina, the Debtors 

would be paying substantially lower quarterly fees than they are paying now. This is the type of 

regionalism the Uniformity Clause was intended to prevent.” (footnote and internal quotation 

marks omitted)).
31

Id. To allow Congress to use that variation to justify charging different fees is to 

“rel[y] on a flawed tautology: Congress can justify treating bankrupts differently 

because it has chosen to treat them differently (higher fees because different 

programs).” Id. 15 Put another way: Application of the “geographically isolated 

problem” exception here would yield the following inexplicable rule: Congress 

must enact uniform laws on the subject of bankruptcy . . . except when Congress 

elects to treat debtors non-uniformly. Such reasoning would render the 

uniformity requirement of the Bankruptcy Clause of the Constitution effectively 

meaningless.

In sum, we cannot evade a finding of non-uniformity through either a 

contortion of the statutory text or an application of the “geographically isolated 

15 The partial dissent in Circuit City similarly recognized that “[j]ustifying the differences here on 

the fact that the Trustee Program districts face the budgetary problems . . . ignores the fact that 

those districts only face the budgetary problems because Congress treated them differently in the 

first place.” Circuit City, 2021 WL 1679568, at *13 (Quattlebaum, J., concurring in part and 

dissenting in part); see also USA Sales, Inc., 2021 WL 1226369, at *17 (declining to conclude “that 

the relevant class of debtors for the purpose of the 2017 Amendment is Chapter 11 debtors in UST 

districts” because this “fails to address why Chapter 11 debtors in UST Districts are required to 

use the UST in the first place, whereas debtors in BA Districts get to use less-expensive 

Administrators” (internal quotation marks, citations, and footnote omitted)).
32

problem” exception. We conclude that the 2017 Amendment, prior to the 2020 

Act, was unconstitutional on its face insofar as it charged higher fees to debtors in 

UST Districts.16 To the extent that Clinton has already paid the unconstitutional 

fee increase, it is entitled to a refund of the amount in excess of the fees it would 

have paid in a BA District during the same time period. In directing this refund,

however, we note that our ruling is limited to the particular debtors who brought 

this appeal, who, as discussed above, clearly have standing to seek 

reimbursement. 

III. Conclusion

In sum, we hold as follows:

16 As noted, see supra at n.5, we conclude only that the pre-2020 Act version of the 2017 

Amendment, 28 U.S.C. § 1930(a)(6)(B), was facially unconstitutional. We do not address the 

constitutionality of the current version, or of any other portion of § 1930, or of any other aspect of 

the UST/BA District system. Clinton raises only a narrow challenge to the pre-2020 Act version 

of the 2017 Amendment, and we confine our ruling to that provision. Cf. St. Angelo, 38 F.3d at 

1532 (“In determining whether the statutory scheme governing the U.S. Trustee system in 

general, and the fee structure outlined in 28 U.S.C. § 1930 in particular, are unconstitutional, we 

must adhere to the principle of judicial restraint. . . . [C]ourts must cautiously exercise their power 

to declare a statute constitutionally void and narrowly confine their holdings when possible.”).
33

1. Clinton has standing to bring its constitutional challenge and to seek 

reimbursement because it filed for bankruptcy in a UST District prior to October 

1, 2018; qualified for and paid a fee increase pursuant to the 2017 Amendment due 

to the size of its disbursements; and paid more than a similarly situated debtor 

(with the same filing date and disbursement size) would owe in a BA District, 

where the increased fee schedule had not yet been implemented by the Judicial 

Conference.

2. Because the 2017 Amendment governs debtor-creditor relations, it is 

subject to the uniformity requirement of the Bankruptcy Clause.

3. Prior to the 2020 Act, the 2017 Amendment was unconstitutionally nonuniform on its face because it mandated a fee increase in UST Districts but only 

permitted a fee increase in BA Districts.

We therefore REVERSE the judgment of the Bankruptcy Court and direct 

that the Bankruptcy Court provide Clinton with a refund of the amount of 

quarterly fees paid in in excess of the amount Clinton would have paid in a BA 

District during the same time period.